PRICE SCALPER FOR NT8
Combine Price Action And Order Flow
Price action and order flow are two similar but different ways to trade the market.
Traders who trade with price action believe that anything that can affect the price is already reflected in it. While order flow traders how trade is being executed affects price.
It got me thinking...what if there was a way to combine price action with order flow? How could myself as a trader benefit from it?
The result was the Price Scalper which is a combination of price action and order flow.
The overriding goal of order flow analysis is that it allows you to figure out who is in control of the market. Once you know who is in control of the market it allows you to place trades with more confidence, monitor the trades you are in to close them early or stay in them longer, beyond your profit targets.
Combining price action and order flow analysis on the same chart offers traders a more comprehensive and nuanced understanding of market dynamics than using either method in isolation. Price action tells you what the market did (the historical path of price), while order flow reveals how and why it did it (the real-time buying and selling pressure driving those movements). This synergy can significantly improve trading decisions and strategies.
Why Combine Price Action and Order Flow?
Price Action Alone can be subjective and prone to false signals. A breakout on a chart might look convincing, but without knowing the underlying order flow (e.g., was it driven by strong volume and conviction, or did it occur on low volume?), it's harder to gauge its validity. Relying solely on patterns can be misleading without understanding the context driving them.
Order Flow Alone can be overwhelming with data, noisy, and difficult to interpret without context. Focusing solely on the numbers without the broader picture provided by price structure can lead to analysis paralysis and difficulty in seeing the larger trend. Order flow is often best used as a confirmation tool within a broader price action or market structure framework.
Order flow is the engine driving price movement. Analyzing the executed orders (volume, bid/ask aggression) helps understand the supply and demand dynamics that create the price patterns you see on the chart.
Benefits of Combining Price Action and Order Flow
Enhanced Confirmation: Order flow can validate or invalidate price action signals.
For example:
Support/Resistance - Seeing significant buy orders (absorption) via footprint charts at a price action support level increases confidence that the level will hold. Conversely, weak order flow at a support level might signal a higher probability of a break.
Breakouts - High volume and strong directional order flow (e.g., aggressive buying) accompanying a price breakout confirms the move's strength. A breakout on low volume or weak order flow might be a false move (fakeout).
Trend Strength - Increasing volume and order flow imbalances in the direction of a trend confirm its health. Declining volume or counter-trend order flow pressure during a trend suggests potential weakening or reversal.
When combining order flow and price action you get improved contextual understanding because these analyses provides a clearer picture of the market environment.
Impulsive vs. Corrective Moves - Identifying strong directional moves (impulsive) driven by order flow imbalances versus sideways or weak moves (corrective) with balanced order flow helps traders align with the dominant market force.
Market Sentiment - Real-time order flow data provides a more accurate gauge of immediate buying or selling pressure than price action alone.
Better Entry and Exit Timing - Order flow help pinpoint specific price levels with high activity (high volume nodes, large limit orders) which often act as crucial support/resistance or magnets for price, allowing for more refined entries and exits.
Spotting absorption or exhaustion patterns in the order flow at key price action levels can provide high-probability entry signals.
Early Reversal Detection - Order flow often reveals shifts in supply and demand before they become obvious on a price chart: Absorption - Large traders being absorbed at highs or lows (indicated by high volume but limited price movement on footprint charts) can signal an impending reversal.
Identifying Institutional Activity - Order flow analysis can help spot large orders (sometimes hidden, like iceberg orders) which can indicate the intentions of institutional traders and potentially foreshadow significant price moves.
By layering the granular, real-time insights of order flow onto the structural map provided by price action, traders can gain a deeper understanding of market dynamics, improve the probability of their setups, and make more informed, confident trading decisions.
Price Scalper can be used alone, and it can also be used in conjunction with order flow.
Here is an example of having bearish sign in the Price Scalper which I am able to confirm with order flow.
Traders who trade with price action believe that anything that can affect the price is already reflected in it. While order flow traders how trade is being executed affects price.
It got me thinking...what if there was a way to combine price action with order flow? How could myself as a trader benefit from it?
The result was the Price Scalper which is a combination of price action and order flow.
The overriding goal of order flow analysis is that it allows you to figure out who is in control of the market. Once you know who is in control of the market it allows you to place trades with more confidence, monitor the trades you are in to close them early or stay in them longer, beyond your profit targets.
Combining price action and order flow analysis on the same chart offers traders a more comprehensive and nuanced understanding of market dynamics than using either method in isolation. Price action tells you what the market did (the historical path of price), while order flow reveals how and why it did it (the real-time buying and selling pressure driving those movements). This synergy can significantly improve trading decisions and strategies.
Why Combine Price Action and Order Flow?
Price Action Alone can be subjective and prone to false signals. A breakout on a chart might look convincing, but without knowing the underlying order flow (e.g., was it driven by strong volume and conviction, or did it occur on low volume?), it's harder to gauge its validity. Relying solely on patterns can be misleading without understanding the context driving them.
Order Flow Alone can be overwhelming with data, noisy, and difficult to interpret without context. Focusing solely on the numbers without the broader picture provided by price structure can lead to analysis paralysis and difficulty in seeing the larger trend. Order flow is often best used as a confirmation tool within a broader price action or market structure framework.
Order flow is the engine driving price movement. Analyzing the executed orders (volume, bid/ask aggression) helps understand the supply and demand dynamics that create the price patterns you see on the chart.
Benefits of Combining Price Action and Order Flow
Enhanced Confirmation: Order flow can validate or invalidate price action signals.
For example:
Support/Resistance - Seeing significant buy orders (absorption) via footprint charts at a price action support level increases confidence that the level will hold. Conversely, weak order flow at a support level might signal a higher probability of a break.
Breakouts - High volume and strong directional order flow (e.g., aggressive buying) accompanying a price breakout confirms the move's strength. A breakout on low volume or weak order flow might be a false move (fakeout).
Trend Strength - Increasing volume and order flow imbalances in the direction of a trend confirm its health. Declining volume or counter-trend order flow pressure during a trend suggests potential weakening or reversal.
When combining order flow and price action you get improved contextual understanding because these analyses provides a clearer picture of the market environment.
Impulsive vs. Corrective Moves - Identifying strong directional moves (impulsive) driven by order flow imbalances versus sideways or weak moves (corrective) with balanced order flow helps traders align with the dominant market force.
Market Sentiment - Real-time order flow data provides a more accurate gauge of immediate buying or selling pressure than price action alone.
Better Entry and Exit Timing - Order flow help pinpoint specific price levels with high activity (high volume nodes, large limit orders) which often act as crucial support/resistance or magnets for price, allowing for more refined entries and exits.
Spotting absorption or exhaustion patterns in the order flow at key price action levels can provide high-probability entry signals.
Early Reversal Detection - Order flow often reveals shifts in supply and demand before they become obvious on a price chart: Absorption - Large traders being absorbed at highs or lows (indicated by high volume but limited price movement on footprint charts) can signal an impending reversal.
Identifying Institutional Activity - Order flow analysis can help spot large orders (sometimes hidden, like iceberg orders) which can indicate the intentions of institutional traders and potentially foreshadow significant price moves.
By layering the granular, real-time insights of order flow onto the structural map provided by price action, traders can gain a deeper understanding of market dynamics, improve the probability of their setups, and make more informed, confident trading decisions.
Price Scalper can be used alone, and it can also be used in conjunction with order flow.
Here is an example of having bearish sign in the Price Scalper which I am able to confirm with order flow.
Here is an example of having a bullish sign in the Price Scalper what I am able to confirm with order flow.
As I said earlier, Price Scalper is a combination of price action and order flow. There are other ways to use it beyond using it with a footprint chart as confirmation. You can use it alone, just as a regular indicator. You can also use it in conjunction with other technical indicators.
Let's Take A Look At Some Charts
While Price Scalper was coded to run in conjunction with an order flow footprint chart, you will be happy to learn that Price Scalper will run on a normal candlestick chart.
When analyzing price action and order flow, a trader knows that each market has it own volatility, which as you know some markets move slow and trend nicely, while on the other extreme as markets that are highly volatile and trade more wild. While the price action is mostly the same, the order flow is going to be different.
Price Scalper allows a trader to compensate for that with the Swing Filter. You would use a low setting such as 1 (which is the lowest) for quiet markets and go up from there. I suggest settings of 1, 3, 5, 10, 25 and 50.
When analyzing price action and order flow, a trader knows that each market has it own volatility, which as you know some markets move slow and trend nicely, while on the other extreme as markets that are highly volatile and trade more wild. While the price action is mostly the same, the order flow is going to be different.
Price Scalper allows a trader to compensate for that with the Swing Filter. You would use a low setting such as 1 (which is the lowest) for quiet markets and go up from there. I suggest settings of 1, 3, 5, 10, 25 and 50.
For slow moving markets like bonds, ZB, and ten years, ZN, I would suggest a setting of 1.
For normal moving markets like currencies and ES, I would suggest a setting of 5 or 10.
For the fastest, most volatile markets, like FDAX, YM, NQ, MNQ I would suggest a setting of 25 or 50.
Ultimately, it is up to you to decide what setting you want to use for the market and chart type you trade. Some traders like to have a lot of trade signals, while others prefer less trades.
For most of my trading career, I have never been a fan or user of technical tools such as moving averages. I have always focused on order flow. But since starting Orderflows.com many users have been ways to combine order flow with technical indicators.
One of the ways that have been successful for many traders is trading order flow in direction of the trend and to do that is to use an HMA (Hull Moving Average). Other traders even used a 9 EMA.
One of the ways that have been successful for many traders is trading order flow in direction of the trend and to do that is to use an HMA (Hull Moving Average). Other traders even used a 9 EMA.
When using a trend filter, I suggest starting with the lowest setting of 1 to start because you are looking for the momentum (trend) in the market to trade with.
When creating Price Scalper, the thought of putting in a trend filter did arise. However, rather than restrict you we purposely left it out so you could create your own trading strategies with the Price Scalper as the foundation.
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FAQs
Q. I have 2 PC's, do I need additional licenses?
A. No, your license is good for up to 5 PCs.
Q. Do I need to use tick replay?
A. No, tick replay is not required.
Q. Is the Price Scalper a footprint chart?
A. No. The Price Scalper is an order flow tools that analyzes all the data
you would normally see on a footprint chart - the delta, imbalances, POC and volume.
Q. Do I need a footprint chart to use the Price Scalper?
A. No, the Price Scalper will run on normal bar or candlestick chart as well as a footprint chart.
Q. What trading platform does the Price Scalper work on?
A. The Price Scalper is programmed for NinjaTrader 8.
Q. Do I need the PAID version of NinjaTrader 8 or can I use the FREE version?
A. The Price Scalper will run on the PAID version as well as the FREE version of NT8.
Q. I use Sierra Chart, is the Price Scalper available for Sierra Chart?
A. No. At the moment the Price Scalper is only available for NT8.
Q. I see you have different markets and different time frames, do I need to follow so many different markets?
A. No, I show you different markets and different chart types so you can see for yourself how the Price Scalper works under different conditions.
Q. Does the Price Scalper work with Markers Plus from The Indicator Store?
A. Yes it does.
Q. I trade Forex, can I use the Price Scalper to analyze FX markets?
A. Not really. Forex data is not centralized so analyzing order flow from various sources is not an ideal situation. If you want to trade Forex, I would suggest you trade the FX futures available at the CME where the data is centralized and better to analyze the order flow.
Q. What markets work best with Price Scalper?
A. Futures and stocks work best with the Price Scalper.
Q. What time frame is best for Price Scalper?
A. Order flow in generally is best for shorter time frames. If you trade anything from 30 second charts to 5 minutes, Price Scalper performs well. When you start analyzing order flow over 15 minutes, the order flow that happened earlier is not as relevant.
Q. Is there a sound alert?
A. Yes, there is a default sound alert that you can change to your own custom .wav file.
A. No, your license is good for up to 5 PCs.
Q. Do I need to use tick replay?
A. No, tick replay is not required.
Q. Is the Price Scalper a footprint chart?
A. No. The Price Scalper is an order flow tools that analyzes all the data
you would normally see on a footprint chart - the delta, imbalances, POC and volume.
Q. Do I need a footprint chart to use the Price Scalper?
A. No, the Price Scalper will run on normal bar or candlestick chart as well as a footprint chart.
Q. What trading platform does the Price Scalper work on?
A. The Price Scalper is programmed for NinjaTrader 8.
Q. Do I need the PAID version of NinjaTrader 8 or can I use the FREE version?
A. The Price Scalper will run on the PAID version as well as the FREE version of NT8.
Q. I use Sierra Chart, is the Price Scalper available for Sierra Chart?
A. No. At the moment the Price Scalper is only available for NT8.
Q. I see you have different markets and different time frames, do I need to follow so many different markets?
A. No, I show you different markets and different chart types so you can see for yourself how the Price Scalper works under different conditions.
Q. Does the Price Scalper work with Markers Plus from The Indicator Store?
A. Yes it does.
Q. I trade Forex, can I use the Price Scalper to analyze FX markets?
A. Not really. Forex data is not centralized so analyzing order flow from various sources is not an ideal situation. If you want to trade Forex, I would suggest you trade the FX futures available at the CME where the data is centralized and better to analyze the order flow.
Q. What markets work best with Price Scalper?
A. Futures and stocks work best with the Price Scalper.
Q. What time frame is best for Price Scalper?
A. Order flow in generally is best for shorter time frames. If you trade anything from 30 second charts to 5 minutes, Price Scalper performs well. When you start analyzing order flow over 15 minutes, the order flow that happened earlier is not as relevant.
Q. Is there a sound alert?
A. Yes, there is a default sound alert that you can change to your own custom .wav file.
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CFTC Rules 4.41:
Hypothetical Or Simulated Performance Results Have Certain Limitations, Unlike An Actual Performance Record, Simulated Results Do Not Represent Actual Trading. Also, Since The Trades Have Not Been Executed, The Results May Have Under-Or-Over Compensated For The Impact, If Any, Of Certain Market Factors, Such As Lack Of Liquidity. Simulated Trading Programs In General Are Also Subject To The Fact That They Are Designed With The Benefit Of Hindsight. No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Profit Or Losses Similar To Those Shown.
Disclaimer:
This Presentation Is For Educational And Informational Purposes Only And Should Not Be Considered A Solicitation To Buy Or Sell A Futures Contract Or Make Any Other Type Of Investment Decision. Futures Trading Contains Substantial Risk And Is Not For Every Investor. An Investor Could Potentially Lose All Or More Than The Initial Investment. Risk Capital Is Money That Can Be Lost Without Jeopardizing Ones Financial Security Or Life Style. Only Risk Capital Should Be Used For Trading And Only Those With Sufficient Risk Capital Should Consider Trading. Past Performance Is Not Necessarily Indicative Of Future Results.
Risk Disclosure:
Futures And Forex Trading Contains Substantial Risk And Is Not For Every Investor. An Investor Could Potentially Lose All Or More Than The Initial Investment. Risk Capital Is Money That Can Be Lost Without Jeopardizing Ones’ Financial Security Or Life Style. Only Risk Capital Should Be Used For Trading And Only Those With Sufficient Risk Capital Should Consider Trading. Past Performance Is Not Necessarily Indicative Of Future Results.
Hypothetical Performance Disclosure:
Hypothetical Performance Results Have Many Inherent Limitations, Some Of Which Are Described Below. No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Profits Or Losses Similar To Those Shown; In Fact, There Are Frequently Sharp Differences Between Hypothetical Performance Results And The Actual Results Subsequently Achieved By Any Particular Trading Program. One Of The Limitations Of Hypothetical Performance Results Is That They Are Generally Prepared With The Benefit Of Hindsight. In Addition, Hypothetical Trading Does Not Involve Financial Risk, And No Hypothetical Trading Record Can Completely Account For The Impact Of Financial Risk Of Actual Trading. For Example, The Ability To Withstand Losses Or To Adhere To A Particular Trading Program In Spite Of Trading Losses Are Material Points Which Can Also Adversely Affect Actual Trading Results. There Are Numerous Other Factors Related To The Markets In General Or To The Implementation Of Any Specific Trading Program Which Cannot Be Fully Accounted For In The Preparation Of Hypothetical Performance Results And All Which Can Adversely Affect Trading Results.
CFTC Rules 4.41:
Hypothetical Or Simulated Performance Results Have Certain Limitations, Unlike An Actual Performance Record, Simulated Results Do Not Represent Actual Trading. Also, Since The Trades Have Not Been Executed, The Results May Have Under-Or-Over Compensated For The Impact, If Any, Of Certain Market Factors, Such As Lack Of Liquidity. Simulated Trading Programs In General Are Also Subject To The Fact That They Are Designed With The Benefit Of Hindsight. No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Profit Or Losses Similar To Those Shown.
Disclaimer:
This Presentation Is For Educational And Informational Purposes Only And Should Not Be Considered A Solicitation To Buy Or Sell A Futures Contract Or Make Any Other Type Of Investment Decision. Futures Trading Contains Substantial Risk And Is Not For Every Investor. An Investor Could Potentially Lose All Or More Than The Initial Investment. Risk Capital Is Money That Can Be Lost Without Jeopardizing Ones Financial Security Or Life Style. Only Risk Capital Should Be Used For Trading And Only Those With Sufficient Risk Capital Should Consider Trading. Past Performance Is Not Necessarily Indicative Of Future Results.
Risk Disclosure:
Futures And Forex Trading Contains Substantial Risk And Is Not For Every Investor. An Investor Could Potentially Lose All Or More Than The Initial Investment. Risk Capital Is Money That Can Be Lost Without Jeopardizing Ones’ Financial Security Or Life Style. Only Risk Capital Should Be Used For Trading And Only Those With Sufficient Risk Capital Should Consider Trading. Past Performance Is Not Necessarily Indicative Of Future Results.
Hypothetical Performance Disclosure:
Hypothetical Performance Results Have Many Inherent Limitations, Some Of Which Are Described Below. No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Profits Or Losses Similar To Those Shown; In Fact, There Are Frequently Sharp Differences Between Hypothetical Performance Results And The Actual Results Subsequently Achieved By Any Particular Trading Program. One Of The Limitations Of Hypothetical Performance Results Is That They Are Generally Prepared With The Benefit Of Hindsight. In Addition, Hypothetical Trading Does Not Involve Financial Risk, And No Hypothetical Trading Record Can Completely Account For The Impact Of Financial Risk Of Actual Trading. For Example, The Ability To Withstand Losses Or To Adhere To A Particular Trading Program In Spite Of Trading Losses Are Material Points Which Can Also Adversely Affect Actual Trading Results. There Are Numerous Other Factors Related To The Markets In General Or To The Implementation Of Any Specific Trading Program Which Cannot Be Fully Accounted For In The Preparation Of Hypothetical Performance Results And All Which Can Adversely Affect Trading Results.
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